How to get annual cash returns out of the rare stamp market and reduce your tax bill at the same time

Worldwide inflation concerns are back. Low savings rates in a high inflation environment spell real trouble for those with wealth accumulated. The big issue is how to protect your wealth, without resorting to undue risk taking.

An investment in rare stamps is an investment in a tangible asset. The basic principle - buy a portfolio of stamps, hold them for a number of years to wait for the prices to go up, then sell to make your capital return.

But, what if you need your investments to generate income each year? Not all of us have the luxury of being able to tie up our capital for lengthy periods.

If you are looking to get a better return on your savings or if you need to create annual income, I have come up with the perfect answer...

The solution is just a simple tweak on one of our existing investment products - the "Flexible Trading Portfolio". All you need to do is sell part of your portfolio each year to generate an "effective annual income". It's not income though...

What you are doing is selling assets each year, generating capital gains. If you are a UK taxpayer, you pay just 18% tax on any annual capital gains above your annual allowance, (currently £10,600). You can double that allowance, for a joint investment with your spouse.

Higher rate taxpayers can compare that to 40% or 50% on normal income investments.

It beats me why anyone would keep savings in a bank in the UK earning 3% interest. Knock of tax at 50% and the income you are getting is about a third of how much your cost of living is going up by right now. In other words, you get poorer every year.

I think this is unjust. That's what prompted me to come up with this solution for you.

Our trading commissions slashed by 40%

First thing I needed to do to make this work for you was to reduce the trading commission we charge you on exit. This was the hard part for me, as this is how we make our money!

But then, I thought about it some more...

To make annual returns out of investing in rare stamps, you will be selling part of your portfolio each year. That means we get to trade your items quicker thus making our trading spread more regularly.

I've worked the numbers on this and run them by our Finance Director. I am delighted with the result...

I am able to offer you a 40% reduction in our normal trading commission on exit. In other words, you will pay only 30% commission on the profit we make for you, rather than 50%. Note the key words here - "the profit we make for you"...

That's what makes our trading commission structure so fair. We only charge you commission when we make you a profit. Your interests and ours are truly aligned.

The lower trading commissions on exit means you can afford to treat your investment as a liquid portfolio and trade as often as you like.

Financial Illustration

The only question remaining is - what sort of returns would you expect to make each year?

Follow the link below to view an example portfolio showing historic returns over the past 5 years:

Click here to view historic portfolio example returns

Obviously, as this is retrospective, you can accuse me of picking the best stamps. You have my word that my selection was nothing more than some stamps that I could pick off the top of my head. Stamps that I know we have sold in the past few years to investors.

The illustration assumes that you do nothing more clever than sell the top performing two stamps each year. In practice, we would give you some steer as to whether we think certain stamps are better to hold on to based on market demand in specific areas at that time.

I deliberately included one stamp - the 1976 Roses error - to show you the potential downside. That is, the risk you sell your winners early to generate annual returns, missing out on substantial growth later. That said, if your objective is to get annual cash returns, then missing future returns is inevitable if you are selling assets that rise in value each year (based on proven historical performance).

In the example, I have selected a portfolio worth £100,000 containing 9 stamps, sold over a 5-year period. The result was that your up-front investment would have been fully returned after 3 years and giving a total profit of £38,150 during the five year period. The obvious caveat is required that historic performance is no guarantee of future returns.

I assumed in this example that cash returns each year were immediately put into a savings account paying interest at 3% per annum. Assuming tax paid on that interest at 50%, total returns after five years increased to 43.7%. To put that into context

- you would need to find a bank that will pay you 15% interest each year to match that return.

Restricted Subscription Product

There is a limit to how much money we will accept into this product. Above all else, we have to be comfortable that we can provide the necessary liquidity to make this work for you.

For that reason, I have set the total subscription limit at just £1 million. You will need to contact us promptly if you want to subscribe. Please read the full terms and conditions of our "Flexible Trading Portfolio" by following the link below:

Click here to view terms and conditions of Flexible Trading Portfolio

To order a flexible trading portfolio (for annual returns), please complete the online subscription form below (minimum order size: £10,000):

Click here to order your flexible trading portfolio

If you have any further questions, please e-mail me at mhall@stanleygibbons.com and I will either respond to you directly or ensure one of our Investment Portfolio Managers deals with your queries promptly.

The horrible economic climate we live in with rising inflation and low interest rates represents a penalty for being successful, hard working and frugal. My aim here is to give you another option to avoid the systematic annual decline of your wealth through no fault of your own.

Best Wishes,

Mike Hall Chief Executive Stanley Gibbons Group Plc

PS. This is both an innovative and exceptional opportunity to improve your returns on your savings and to reduce your tax bill at the same time. I think this is so compelling that demand for this offer will be more than we can accept. I therefore respectfully suggest you act promptly if you want in before subscriptions close.

Click here to subscribe now